Head of energy regulator nabbed in anti-graft sting

INDONESIA - Anti-graft officials have arrested the head of the agency that oversees the exploration and production of crude oil and natural gas in Indonesia.

Mr Rudi Rubiandini was nabbed at his South Jakarta home on Tuesday night red-handed with US$600,000 (S$762,000) in various currencies.

Arrested with him was a private golf trainer identified as A, who acted as a middleman delivering money from the executive of an oil trading company, identified as S.

Mr Rudi, 51, was suspended from his post as the head of upstream oil and gas regulator SKK Migas on Wednesday.

The Corruption Eradication Commission (KPK) did not disclose the full names of the other two men.

But it nabbed the golf trainer when he showed up at Mr Rudi's home riding a BMW motorcycle that was meant to be given to the SKK Migas chief.

Indonesian media said S was arrested at an apartment in Jakarta at midnight on Tuesday.

The arrests come two days before President Susilo Bambang Yudhoyono announces the 2014 national Budget, as economic growth in the second quarter came in under 6 per cent for the first time since 2010.

Growth in foreign direct investment is also set to slow, as the trade deficit widens and rupiah weakens. The oil and gas sector contributed about a quarter of Indonesia's annual Budget revenue last year.

The country wants more oil and gas exploration, but the introduction of nationalistic policies and controversial criminal prosecutions against foreign oil company employees have soured investor perceptions and are seen as running counter to this goal. Energy and Mineral Resources Minister Jero Wacik said on Wednesday that the alleged corruption case against Mr Rudi would not affect investment in the oil and gas sector in Indonesia.

"Investors would not see who is at the helm of SKK Migas. The key is whether the government is committed (to promoting investment). "The government in fact is committed," Mr Jero said at a press conference.

SKK Migas also posted a statement on its website saying that upstream oil and gas activities in Indonesia have not been affected by the detention and interrogation of its head.

"The upstream oil and gas industry is very strategic and its activity must not be affected, thus there should not be a vacuum in the running of the agency," SKK Migas secretary Gde Pradnyana said in the statement.

However, Mr Lin Che Wei of Independent Research and Advisory Indonesia said the case will paralyse the restructuring of the oil and gas sector, which he deems as the country's most crucial sector.

"This will become the corruption case with the largest economic impact and ramification in Indonesia's history," Mr Lin told The Straits Times.

"Indonesia is suffering from triple deficits - state Budget, trade and primary balance deficits.

"The oil and gas sector is the cause of all these deficits."

Mr Rudi was the first head of SKK Migas, which was set up in January after Indonesia's Constitutional Court dissolved its predecessor BP Migas on nationalistic grounds.

His arrest came as a surprise to many as he is a leading academic and was viewed as a clean figure friendly to foreign investors. KPK commissioner Bambang Widjojanto told a media briefing that investigators believed the cash found on Mr Rudi was the second batch, "which followed the first delivery that amounted to US$300,000 days earlier".

Investigators also found another US$200,000 at A's home, according to Mr Bambang of the KPK, and confiscated the BMW motorcycle at Mr Rudi's home.


Get a copy of The Straits Times or go to straitstimes.com for more stories.